To reallocate or not: Reconsidering the dilemma in China's agricultural land tenure policy

In China, rural land is collectively owned at the village level. Village officials usually have the power to reallocate land property across families on an ongoing basis due to demographic changes in the village. Realizing that frequent land reallocation and abusive land requisition will undermine economic productivity as well as social stability, the "Rural Land Contract Law" passed in 2002 explicitly reads that farmland tenure security must be maintained for at least 30 years since the last nationwide reallocation in 1998. The frequency and magnitude of land reallocation in Chinese villages have decreased as a result. However, failure to allocate land to the newly increased population often induced conflicts among village members if the security of land tenure for 30 years was strictly implemented. Administrative land reallocations then still continued in some villages to accommodate demographic changes in these places. Based on an almost nationally representative rural dataset collected in 119 villages of 6 provinces across China in 2008, this paper lays out some stylized facts about the administrative land reallocation after 1998. By analyzing the opinions of over 2200 farmers on the central policy of maintaining farmland tenure security, we are able to rationalize why some farmers support the policy while others oppose it. This analysis helps us to better understand the dilemma between efficiency and equity embedded in the current agricultural land system in China. It is further shown that social conflicts among village members may easily arise either due to administrative land reallocation or due to lack of it. We argue that this dilemma cannot be resolved effectively without coordinated reforms in household registration system which can help hundreds of millions of Chinese rural migrant workers to permanently settle in cities and release their farmland to those who stay in the countryside. (C) 2011 Elsevier Ltd. All rights reserved.